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Exam 22: S Corporations

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Question 21

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Ryan is the sole shareholder of Sweetwater Apartments,an S corporation in Sour Lake,Texas.At a time when his stock basis is $10,000,the corporation distributes appreciated property worth $100,000 (basis of $10,000) .There is no built-in gain.Ryan's taxable gain is:

A) $0.
B) $10,000.
C) $90,000.
D) $100,000.
E) None of the above.

F) A) and B)
G) A) and C)

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Question 22

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An S corporation's LIFO recapture amount equals the excess of the inventory's value under ____________________ over the ____________________ value.

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Question 23

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Lott Corporation in Macon,Georgia converts to S corporation status in 2011.Lott used the LIFO inventory method in 2010 and had a LIFO inventory of $420,000 (FIFO value of $550,000) .How much tax must be added to the 2010 corporate tax liability,assuming that Lott is subject to a 35% tax rate.

Meeting the definition of a small business corporation is a ____________________ requirement for maintaining the S status.

Since loss property receives a ____________________ in basis without any loss recognition,S corporation distributions of loss property should be ____________________.

An S corporation does not recognize a loss when distributing assets that are worth less than their basis.

During 2011,Ms.Rasic,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2010,Ms.Rasic's stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.Calculate the amount and type of income Ms.Rasic recognizes in 2011,assuming there is no C corporation AEP.

How may an S corporation manage its liability for the built-in gains tax?

Which item does not appear on Schedule K of Form 1120S?

An S shareholder's basis is increased by stock purchases and capital contributions.

A widower and his spouse's estate are treated as one shareholder.

The § 1202 exclusion of gain is available on disposition of S corporation stock.

You are given the following facts about a one-shareholder S corporation,and you are asked to prepare the shareholder's ending stock basis.

For S corporation status to apply in the current tax year,the election must be filed during the grace period before the 15th day of the third month of the current year.

S corporation income is taxed at the ____________________ level and not at the ____________________ level. or

A(n)____________________ alien cannot own stock in an S corporation.

Which,if any,of the following is not an eligible shareholder of an S corporation?

Tax-exempt income is a Schedule K item for an S corporation.

The carryover period for the NOLs of a C corporation continues to run during S corporation years.

Janet Wang is a 50% owner of a calendar year S corporation.During 2011,the S corporation has ordinary income of $175,000,short-term capital gain of $94,000,tax-exempt income of $22,000,and a charitable contribution of $18,000.What S corporation items must Janet report in 2011?